Tel Aviv Diary November 18, 2022
Netanyahu and Smotrich in game of chicken, Zim and IAI have good quarters and much more
POLITICS
The 25th Israeli Knesset was sworn in on Wednesday, with the usual pomp and circumstance, coupled with the hope harbored by some of its newest members that they won’t be forced into early retirement due to premature elections. Former Prime Minister Netanyahu is having a more challenging time than he expected working to form his new coalition. Netanyahu initially expected to present the new coalition on Wednesday, when a new Knesset was sworn in. However, his coalition partners refused to go ahead with finalizing the government without signed coalition agreements. While there are some issues over policy, the major stumbling block is the question of who will be the Minister of Finance and Minister of Defense.
Bezalel Smotrich of the far-right-wing Religious Zionist party wants to be Defense Minister — there are only two problems with that placement. First, the American government has made it clear that the person tapped to be Defense Minister — who needs to work closely with the US Defense establishment — should not be someone like Smotritch. Second, there is significant pushback from the Israeli public over the possibility of someone becoming Defense Minister who managed to avoid full military service, and served for just a short time as a clerk. Oh, I forgot — there is also the fact that in his youth, Smotrich had planned a terrorist attack inside Israel.
According to reports, Smotritch has agreed to be Finance Minister. However, the problem is that Aryeh Deri, who recently pleaded guilty to tax evasion, has stated he wants that position. There has been talk of rotating the position between the two men. But regarding their divergent economic outlooks, that would be like rotating a job between Bernie Sanders and Ted Cruz. At the moment coalition talks are stalled. There was talk that Netanyahu might bring a minority government of 57 (without the Religious Zionists) to a vote, but Smotritch responded that if they did, he would vote against that government. I am sure this dispute will eventually be resolved but at the moment it is a game of chicken. Netanyahu has a total of another six weeks to solve the issues.
WEST BANK
On Tuesday morning, a deadly terror attack began outside Ariel’s industrial zone. The terrorist, an 18-year-old Palestinian who worked in the industrial zone, stabbed a security guard at the industrial zone entrance, and then went on to stab three others at a nearby gas station. Next, the terrorist stole a car, crashed into another vehicle, stabbed more people, and then drove against traffic, crashing into cars before emerging from his vehicle and being killed by security personnel in the area. Motti Ashkenazi, Michael Ladygin and Tamir Avihai were all killed. Sadly, the phenomenon of lone terrorists is likely to continue. There are enough Palestinian youth who feel they have no future, and have had friends or family hurt by Israelis over the past years, that violence can break out at any time.
The FBI announced it would start an independent probe into the death of Palestinian-American journalist Shireen Abu Akleh. The decision to begin the inquiry came from the US Department of Justice, and was not a political decision emanating from the White House or the State Department. Israel is, of course, furious at the decision, and vowed not to cooperate. Ultimately, the intensified scrutiny is not that surprising, since Israel never did a full investigation on its own, other than to admit that Abu Akleh was likely killed by Israeli gun fire.
DEFENSE
This week, an Iranian drone attacked an oil tanker partly owned by an Israeli off the coast of Oman. Damage was minor, and there were no injuries. This aggression comes during the same week it was reported that Iran tried to kill an Israeli in the country of Georgia. Iran is attempting any way it can to retaliate for Israel’s repeated attacks on its assets in Syria, so far, without success.
Israel has tested its “C-Dome” system, which is a naval equivalent of the Iron Dome. The test was successful and its expected to provide a defense for Israeli naval vessels from missile attacks.
ECONOMY
Inflation in Israel continued to be higher than hoped for, with inflation at a 6% annual rate. Housing prices rose at the unprecedented, nearly 20%.
Palo Alto will purchase Israel’s Cybersecurity company, Cider Security, for $300 million. $200 million will be paid in cash, with the balance awarded in stock. To date, Cider Security, founded in 2020, raised $32 million.
Elbit Systems Ltd., announced it was awarded a contract valued at approximately $200 million to supply Electronic Warfare and airborne laser technologies for the protection of military helicopters of a country in the Asia-Pacific. The contract will be executed over a four-year period.
In addition Elbit announced it was awarded a contract valued at $72 million to supply HermesTM 900 Unmanned Aircraft Systems (UAS) and training capabilities to an international customer. The contract will be performed over a two-year period.
Under the contract, Elbit Systems will supply Hermes 900 UAS equipped with the SkEyeTM Wide Area Persistent Surveillance system, SPECTROTM XR multi-spectral Electro-Optical payload, Satellite Communication, Signal Intelligence (SIGINT) payloads and additional capabilities.
Under the contract, Elbit Systems will supply self-protection suites comprised of the Infra-Red Passive Airborne Warning Systems (PAWS IR) and the Mini-MUSIC Direct Infra-Red Counter Measure (DIRCM) Systems. These protection suites are designed to increase survivability and mission effectiveness of helicopters in arenas threatened by shoulder-fired heat seeking anti-aircraft missiles. The protection suites to be supplied will be installed aboard both attack and utility helicopters. MUSIC DIRCM systems have been selected to date by numerous customers across the globe.
Israel Aerospace Industries (IAI) reported a quarterly profit of $202 million its largest quarterly profit ever.
ZIM recorded Q3 2022 net income of $1.17 billion and continued to deliver very strong operating margins. Delivered record results for the first nine months of 2022, including net income of $4.2 billion. ZIM’s revised 2022 full-year guidance expects to generate an adjusted EBITDA of $7.4-$7.7 billion and an adjusted EBIT of $6.0-$6.3 billion
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A PIECE OF HISTORY
Tel Aviv Central Bus Station
The central bus station in Tel Aviv was supposed to be Tel Aviv’s crown jewel. Instead, the central bus station became the largest white elephant in Israel. Work initially began in 1967, but due to financial complications, the new bus hub was not completed until 1993. The modernized station, a replacement for the old Central bus station, which was just a series of platforms (surrounded by — from what I remember — some great bakeries) was supposed to be transformative. The central bus station’s original design called for one floor for buses, and one for retail. However, during its lengthy construction process, additional floors were added, so that the final terminal has seven floors — of which, only three are used by the buses. Unfortunately, during the course of the time the terminals were constructed, the heart of the city moved northward, and as more and more people bought cars, using the less than convenient bus service was something those who could afford would often ignore. The retail shops, meant to give life to the terminals, failed to take off. Slowly almost all the stores closed, leaving large parts of what is the second largest bus terminal in the world empty— except for the bats that have found a great habitat. At the moment, the terminal is scheduled to be closed and destroyed next year.
